A recent Louisiana Third Circuit opinion serves as a stark reminder of the harsh results that can follow if the name of a party to a recorded instrument is incompletely or improperly listed.

The Louisiana Public Records Doctrine generally expresses a public policy that interests in real estate (or, to use Louisiana terminology, immovable property) must be recorded in order to affect third persons.  Simply put, an instrument in writing affecting immovable property which is not recorded is null and void except between the parties.  The public records doctrine is founded upon Louisiana’s public policy and social purpose of assuring stability of land titles.  Louisiana law relative to registry was restated and revised by the legislature in 2005 by Act 169.   The Louisiana Public Records Doctrine is now generally set forth in Louisiana Civil Code article 3338, which states:

The rights and obligations established or created by the following written instruments are without effect as to a third person unless the instrument is registered by recording it in the appropriate mortgage or conveyance records pursuant to the provisions of this Title:

1. An instrument that transfers an immovable or establishes a real right in or over an immovable.
2. The lease of an immovable.
3. An option or right of first refusal, or a contract to buy, sell or lease an immovable or to establish a real right in or over an immovable.
4. An instrument that modifies, terminates, or transfers the rights created or evidenced by the instruments described in Subparagraphs (1) through (3) of this Article.

The Louisiana Third Circuit Court of Appeal recently addressed the Public Records Doctrine in Black Water Marsh, LLC v. Roger C. Ferriss Properties, Inc., 2013-447 (La. App. 3 Cir. 1/8/14), 130 So.3d 968 (rehearing denied 2/26/14), regarding a recorded instrument that improperly identified the parties to the instrument and was therefore improperly indexed.  The Third Circuit concluded that the instrument was not effective against a subsequent purchaser of the property at issue.

The dispute arose out of a 2006 marsh lease agreement.  The lease was executed by Janice Ferriss on behalf of Roger C. Ferris Properties, Inc. as lessor and by Gary M. Lavoi on behalf of Black Water Marshes, Inc. as lessee.  Under the lease, Roger C. Ferriss Properties, Inc. granted hunting and fishing privileges to Black Water Marshes, Inc. over 350 acres in Calcasieu Parish and Jefferson Davis Parish.  Included in the lease was a right of first refusal granted to Black Water Marshes, Inc. if Roger C. Ferriss Properties, Inc. chose to sell the leased property.  The Lease was then recorded in both Calcasieu Parish and Jefferson Davis Parish.

In 2011, Timothy J. Litel purchased the property from Roger C. Ferriss Properties, Inc.  Mr. Litel performed a title search in both Calcasieu Parish and Jefferson Davis Parish, but did not discover this lease.  A few months later, Black Water Marsh, LLC filed suit against Mr. Litel, Roger Ferriss Properties and Janice Ferriss seeking (1) injunctive relief against Timothy Litel, who denied Black Water Marsh access to the property during hunting season; (2) dissolution of the sale between Timothy Litel and Roger Ferriss Properties; or (3) in the alternative, a money judgment against defendants for its losses suffered as a result of being denied the right of first refusal due under the lease.  In response, Mr. Litel asserted peremptory exceptions of no right and no cause of action.  The trial court granted Mr. Litel’s exceptions based on its interpretation of the Louisiana Public Records Doctrine.

In affirming the trial court, the Third Circuit identified several issues with the recorded lease.  First, the court noted issues with both the identification (or naming) of the lessee and the lessor, finding that the lessee, Black Water Marshes, Inc., did not exist as a legal entity at the time the lease was executed and that the named lessor was identified in three different ways throughout the lease: Roger Ferris Properties; Janice Ferris of Roger Ferriss Properties; and Roger Ferriss Properties.  Next the court noted that although the lease was recorded in the appropriate conveyance offices, the recordation process in both Calcasieu Parish and Jefferson Davis Parish resulted in indexing errors that made locating the lease in the public records difficult.  Specifically, in Calcasieu Parish, “Roger Ferris Properties” was indexed as the lessor, instead of Roger C. Ferriss Properties, Inc., and in Jefferson Davis Parish, “Janice Ferriss” was indexed as the lessor.  Neither parish correctly indexed Roger C. Ferriss Properties, Inc., the owner of the property, as the lessor.  Additionally, both parishes indexed Black Water Marshes, Inc., which was a non-existent corporation, as lessee.  “Thus, when the lease was recorded in the conveyance records of Calcasieu Parish, neither indexed party to the lease agreement existed as a legal entity; and when the lease was recorded in the conveyance records of Jefferson Davis Parish, one of the indexed parties did not exist as a legal entity, and the other could at best be described as ʻJanice Ferriss d/b/a Roger Ferriss Properties.’”

Black Water Marsh, LLC argued that at the time of the sale, Mr. Litel knew of the lease and should have insisted on seeing a copy of it before the closing of the sale or, at the very least, should have found the lease through an examination of the public records.  The Third Circuit disagreed, stating that under the Louisiana Public Records Doctrine Mr. Litel was not required to take notice of anything outside of the public records and that plaintiffs’ attempts at recordation of the lease were not effective against Mr. Litel.  The court cited language from a recent Louisiana Supreme Court decision:

“[t]he Louisiana Public Records Doctrine generally expresses a public policy that interest in real estate must be recorded in order to affect third persons.  Simply put, an instrument in writing affecting immovable property which is not recorded is null and void except between third parties.”  Citing Cimarex Energy Co. v. Mauboules, 09-1170, p. 18 (La. 4/9/10), 40 So.3d 931, 943.

In rejecting the argument that the recordation was sufficient, the Third Circuit cited Louisiana Civil Code article 3353, which provides that “[a] recorded instrument is effective with respect to a third person if the name of a party is not so indefinite, incomplete, or erroneous as to be misleading and the instrument as a whole reasonably alerts a person examining the records that the instrument may be that of the party.”  The court found that “the inappropriateness of the recordation, i.e., the recordation in names which would not appear on a search of the title under the record owner, rendered the recording to be so indefinite, incomplete, and erroneous that it did not reasonably alert a person examining the title of any claim by those parties.”  Therefore, the Third Circuit found no error in the trial court’s ruling that the recordation of the lease was not effective against third persons.  Accordingly, Mr. Litel was deemed protected under the Louisiana Public Records Doctrine.

This recent decision by the Third Circuit serves as a cautionary tale of the harshness that can be associated with the Public Records Doctrine if an instrument affecting immovable property is not properly drafted and recorded.  Parties to such instruments should take great care to ensure not only that the instrument is recorded in the appropriate mortgage or conveyance records, but also that the parties named on the instrument are accurately identified.